Classification of Goods — The applicant has sought advance ruling in respect of the following questions:

i. Whether the street lighting activity under the Energy Performance Contract dated 05.12.2016 is to be considered as Supply of goods or a Supply of Services under the CGST / KGST Act 2017? Accordingly, whether the transaction can be sub-classified as a ‘Pure Supply of Service’ or ‘Pure Supply of goods’ or Composite Supply of goods and services being a works contract?

ii. What is the rate of tax applicable on this transaction? Whether the applicant is entitled to the benefit of exemption under entry 3 or 3A of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017, as amended? If not, what is the applicable rate of tax?

iii. If the transaction is treated as supply of services, what is the time of supply of such services? Whether KEONICS is liable to tax only once the energy saved is certified by the energy auditor? Whether amount credited in joint ESCROW account can be termed as receipt’ especially because the said amount is not under control of KEONICS until the conditions are met?

iv. Without prejudice to above submissions, if the transaction is treated as a supply of goods, what is the time of supply of such supply? Whether KEONICS would be liable to tax only at the time when the possession and ownership in goods are vested to TMC at the end of tenure? What would be the value of the aforesaid taxable supply given the fact that it is based on energy savings which can be computed only when the energy auditor certifies the workings submitted by KEONICS?

Held that—

1. The street lighting activity under the Energy Performance Contract dated 05.12.2016 amounts to composite supply where the principal supply is that of supply of goods.

2. The rate of tax applicable on this transaction is 12% (CGST-6% & SGST-6%), in terms of Sl. No. 226 of Schedule II to the Notification No. 1/2017-CentraI Tax (Rate) dated 28.06.2017, as amended. Further, the applicant is not entitled to the benefit of exemption under entry 3 or 3A of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, as amended, as the impugned supply is not that of pure services.

3. The instant transaction amounts to a composite supply, with supply of goods being principal supply and hence the impugned question is redundant.

4. The time of supply is the date of invoice and the consideration is equal to the value of the invoice, the GST rate being 12%.

Karnataka State Electronics Development Corporation Limited, In Re… [2020] 22 TAXLOK.COM 064 (AAR-Karnataka)